Law Targets Home-Repair Scams

Law Targets Home-Repair Scams

Arkansas homeowners now have an additional protection against unscrupulous home-repair contractors who dash to neighborhoods damaged by severe weather.

LITTLE ROCK - Arkansas homeowners now have an additional protection against unscrupulous home-repair contractors who dash to neighborhoods damaged by severe weather.

Known as "storm chasers," the scam artists attempt to take advantage of storm victims by going door-to-door to offer repair or debris-removals services, typically offering inexpensive prices or other terms designed to entice homeowners to agree right away. But often the scammers demand money up front, sometimes taking a homeowner's insurance claim payment, and then do not complete the promised work.

In response to repeated consumer concerns over these types of scams, Attorney General Dustin McDaniel helped draft a bill to combat the fraud. The consumer-protection measure was a part of the Attorney General's legislative agenda, and it passed the General Assembly overwhelmingly. It was signed into law as Act 1360 last week.

McDaniel issued this consumer alert today to inform Arkansans about the safeguards afforded to homeowners by Act 1360. The act allows consumers to cancel a home repair contract funded by an insurance claim if the insurance company denies all or part of a claim that would have paid for the repair.

"Scam artists that rush into neighborhoods to take advantage of storm victims would tarnish the good names of legitimate, trustworthy contractors. We will work to stop these types of actions," McDaniel said. "Act 1360 enhances my office's ability to pursue unscrupulous contractors who will eagerly take a homeowner's money, but provide nothing in return."

The Attorney General has authority to bring a consumer-protection lawsuit under the state's Deceptive Trade Practices Act against "storm chasers" who violate provisions of the new law.

Storm-chasing scammers often promise to repair storm damage using expected insurance proceeds. In some cases where the insurance claim was paid, scammers have absconded with money without completing the repairs. In some cases where the insurance claim was denied, the scammers attempted to charge exorbitant fees to cancel the repair contract.

The new law, sponsored by Rep. Hank Wilkins IV of Pine Bluff, allows for cancellation of such a contract without a penalty if insurance denies payment. The act works in conjunction with the Arkansas Home Solicitation Sales Act, which provides homeowners the right to cancel most door-to-door sales contracts within three days of signing the agreement.

Legitimate contractors may still receive a reasonable payment for emergency repair work, even if part of a claim is denied.

Under Act 1360, McDaniel can seek restitution on behalf of victims, civil penalties and an injunction to prevent the con artist from engaging in additional illegal behavior.

The Attorney General's Office in the past few years has pursued several lawsuits against storm chasers who have taken money and failed to complete a repair project. In some instances, consumers have not been made aware of the price of a contract. Others are duped into thinking they have received a free estimate on a new roof, when actually the contract calls for the scam artist to be the exclusive roofing provider.

McDaniel urged consumers never to pay for the entire cost of a repair in advance, and always make sure the terms of any contract are in writing. Contracts should indicate the exact type of work to be completed, any warranties or guarantees, and the costs involved.

For more information about protections against storm chasers, as well as other consumer issues, visit www.GotYourBackArkansas.org, or contact the Attorney General's Consumer Protection Division at (800) 482-8982.